Continuation funds remain the transaction type du jour for GPs looking to hold on to their assets longer, with The Jordan Company becoming at least the fourth firm in two months to ink its first continuation vehicle.
Hamilton Lane led the $1.3 billion transaction in which portfolio companies were lifted out of The Resolute Fund II, a 2007-vintage fund with $3.58 billion in capital commitments, according to a statement. It is not clear which assets, or how many, were moved into the new vehicle.
The New York-based mid-market manager offered all existing limited partners the opportunity to exercise a full liquidity option, a rollover option and an option to seek to make additional capital commitments to the fund, according to the release.
The continuation vehicle was “oversubscribed by prospective new investors”, according to Kristin Custar, partner and head of TJC’s global investor capital group.
In the primary market, TJC in February raised $2.86 billion so far for Resolute Fund V, which has a target of $4 billion, according to PEI data.
There have been a spate of first-time continuation fund closes in recent months, with at least three last month: Kohlberg and Company inked an inaugural $1.1 billion continuation vehicle; growth equity shop General Atlantic closed its inaugural continuation vehicle on over $3 billion, making it the fifth largest such fund to date; and energy-focused Arclight Capital Partners closed its first continuation vehicle focused on renewables.
More than one third of the top 50 biggest firms in affiliate title Private Equity International‘s latest PEI 300 ranking of the largest managers in private equity have either completed or are undertaking continuation vehicle transactions.
These transactions will have to contend with the LP side of the market, which is poised to return in 2021. LP stake deals represented 45 percent of planned deployment for the back half of the year, while GP-leds constituted 43 percent, according to the latest survey from M2O. Capital raised in 2021 for LP stake transactions (55 percent) edged out GP-leds (33 percent).
M2O Private Fund Advisors advised TJC on the deal. The firm’s secondaries business is run by Mike Custar, who joined in 2018 from Credit Suisse.
Latham & Watkins served as legal counsel to TJC, and Ropes & Gray served as legal counsel for Hamilton Lane.
A spokeswoman for Hamilton Lane and a spokesman for M2O declined to comment on pricing, the underlying assets or the amount of capital which was for follow-on investment.